Residents at Independence Plaza believe Stuyvesant Town tenants’ recent court victory will help their case against the landlord.

I.P.N. tenants say Stuy Town victory is a win-win

By Julie Shapiro

When a state court ruled last week that Stuyvesant Town’s owner should not have deregulated thousands of apartments, the mega-complex’s tenants weren’t the only ones who celebrated.

At Independence Plaza North, another large, middle-income development, news of the Stuyvesant tenants’ victory re-ignited hopes that Independence Plaza tenants will win the similar battle they are waging against their landlord.

“It’s like hitting the jackpot,” said Diane Lapson, president of the Tribeca complex’s tenant association.

“It can only help us,” added Ed Rosner, another I.P.N. tenant. “It was everything we hoped for. We think the court got it absolutely right.”

In the Stuyvesant Town case, the state Supreme Court’s appellate division ruled unanimously that owner Tishman Speyer Properties was wrong to deregulate more than 3,000 apartments. Tishman Speyer must keep all of the complex’s apartments rent-stabilized since Tishman is receiving a J-51 tax abatement from the city, the judges ruled.

I.P.N. tenants followed the Stuyvesant case closely because Laurence Gluck, I.P.N.’s owner, also received a J-51 abatement from the city. The tenants are arguing that because of the abatement, they, too, should be rent-stabilized.

Gluck, though, sees things differently. He has said he did not know about the J-51 abatement when he bought the building in 2003, and once he found out about it, he discontinued it and reimbursed the city for the benefits he received. Therefore, Gluck thinks he does not owe tenants any rent protections.

A representative for Gluck declined to comment.

The city gives out J-51 tax abatements to developers as an incentive to renovate apartments. In return for fixing up the building, landlords get a property tax break, but they are also supposed to register the apartments as rent-stabilized. Neither Gluck nor Duane Street Associates, I.P.N.’s prior owner, who first received the J-51 in 1998, ever registered the apartments, and for years the tenants had no idea that their units were supposed to be protected.

Gluck is not alone in keeping the abatement secret. Tishman Speyer and former Stuyvesant Town owner Metropolitan Life also did not tell tenants about the building’s J-51. Those tenants may never have known about the abatement, except that Rosner, the I.P.N. tenant, uncovered it while doing research about J-51s across the city.

When tenants at Independence Plaza and Stuyvesant Town realized their buildings had J-51 abatements, they knew they had some rights to stabilized apartments, but many questions remained: Did everyone get stabilized apartments? For how long? What could landlords do to destabilize the apartments?

The court ruling last week answers these questions for Stuyvesant Town, and though Independence Plaza is a different case, some of the same answers may apply.

At least that’s what Seth Miller, the lawyer representing the I.P.N. tenants, is arguing. Miller wrote a letter Monday to Supreme Court Judge Marcy Friedman, who is hearing the I.P.N. case, listing six reasons why the Stuyvesant case points to a victory for I.P.N. tenants.

In the Stuyvesant opinion, the judges say that if a landlord receives a J-51 abatement, all the tenants in the building must be rent-stabilized for the entire duration of the benefit. And even after the abatement ends, the tenants should stay rent-stabilized until they choose to leave their apartments, unless the landlord includes a “prominent notice” in the leases informing the tenants of when the abatement and rent-stabilization will end.

“Here, no one ever got any notice,” said Rosner, the I.P.N. tenant. That means all Independence Plaza tenants should have rent-stabilized apartments for as long as they live at I.P.N., said Rosner, who is a lawyer.

The Stuyvesant opinion also states that if the landlord stops receiving the J-51 tax abatement for any reason, the landlord still has to keep the apartments regulated, according to Miller and Rosner.

That piece is key to the I.P.N. tenants’ argument, because Gluck cut off the J-51 abatement in 2006 and repaid the benefits he received. To Gluck, that means he owes the tenants nothing, but the Stuyvesant ruling suggests otherwise, Rosner said.

“When you apply for and get a J-51 tax abatement, you can’t relieve yourself of the obligations that go with it by at some point later on returning the money,” Rosner said. He said it only cost Gluck $17,879.42 to reimburse the city with interest.

Gluck has said he did not know the building had a J-51 abatement, which is why he didn’t tell the tenants, and as soon as he found out, he cancelled it.

The tenants don’t buy that explanation.

“You’re not dealing with dummies here,” Rosner said. “These are not unsophisticated people. They made the decision that this was the way to go…. A businessman goes in with his eyes wide open, and he has counsel up the wazoo.”

This is not the first time I.P.N. tenants have fought with Gluck over rent protections. Gluck removed the 1,339-unit complex from the Mitchell-Lama affordable housing program in 2004, but the tenant association negotiated a patchwork of other rent protections that allowed most longtime tenants to remain in their apartments.

However, those protections are not as strong or enduring as rent-stabilization would be, and Lapson, president of the tenant association, wishes tenants had known about the J-51 when they were negotiating with Gluck in 2004.

“If we knew we had one, our strategy would have been completely different,” Lapson said.

Some I.P.N. tenants received federal Section 8 housing vouchers under the 2004 agreement, but are now paying nearly market rate, Lapson said. Other tenants have stabilized rent increases under the Landlord Assistance Program, but their rents will start increasing at a faster rate in 2013. Rent-stabilization would provide better protection to both groups, Lapson said.

The tenants have been waiting for Judge Friedman to rule on their case for years, and Rosner speculated that she was waiting for the Stuyvesant Town case to conclude.

“Now that this decision has come down, we hope for a favorable decision on our own case,” Rosner said, adding that he hopes the decision will come soon.